Next enjoys belated Christmas present as sales surge

Next results signal a good Christmas for UK retailers

The Co-op also enjoyed a bumper Christmas, with sales up 6.2% at established stores in the two weeks to 1 January.

The retailer expects total full-price sales this year to nudge up 0.3 per cent, rising to 1 per cent next year.

This morning it reported a rise in sales over the festive period - up 1.5 per cent in the 54 days to December 24.

He added that a 6.1% fall in sales at Next stores against a 13.6% rise in online sales, reflects the struggles facing bricks and mortar retailers as more consumers opt to make purchases on the internet. Part of the improvement as being due to the colder weather leading up to Christmas. Its shares have fallen 7 per cent over the previous year.

The retailer warned that numerous challenges it faced previous year, such as subdued consumer demand and lower spending on clothing, would persist in 2018.

As a result, Next said its annual profits were expected to increase by £8 million to £725 million, a figure still a long way off last year's £790.2 million.

"Many of the challenges we faced last year look set to continue into the year ahead", Next said.

Next forecast full price sales growth of about 1 per cent in the 2018-19 year and another fall in profit to £705 million, with costs growing faster than sales.

"However, we believe that some of these headwinds will ease as we move through the year; we already know that lost price inflation will reduce to 2% in the first half and believe it will disappear in the second half". It said that it is budgeting for full-price sales in 2018 to be between minus 2 per cent and plus 4 per cent. The decision to use the expected £300m of surplus cash generated next year to fund share buybacks rather than special dividends implies management believe the shares represent good value at the moment.

Shares in the group were up more than eight per cent in early trading.

Sofie Willmott, senior retail analyst at GlobalData, notes the retailer's choice to participate in Black Friday for the first time in 2017 will have driven traffic online and footfall into stores, benefiting full price sales at a time when retailers were ferociously fighting for a share of shopper spend.

That is good news for everyone - whether or not you shop at Next.

"Colder weather may have boosted sales in the run-up to Christmas, but the real positive is the more optimistic outlook from Next's CEO Simon Wolfson".



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